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Product, Service & Design Innovation
How a Community-Based Strategy Helped Kirin Create Shared Value

When Japanese brewer Kirin launched its Creating Shared Value (CSV) Division in 2013, the link between competitive advantage and Corporate Social Responsibility (CSR) was a relatively new concept, and Kirin was the first corporation in Japan to institute CSV management. Masaya Hayashida, who spearheads Kirin’s CSV division as executive officer and general manager, states plainly that he is not interested in hypothetical arguments over CSR or CSV. He’s practical, and Kirin’s CSV pursuit of social & economic value has come to fruition in the form of a community-based approach. He spoke with Masahiko Kawamura, President of Alterna Research Institute, to explain.

Reconstruction after the Great East Japan Earthquake was CSV’s starting point

Masahiko Kawamura: It’s been three years since the Kirin Group established Kirin Company Limited to oversee its beverage businesses in Japan, and set up the CSV Division within it. What is Kirin is trying to achieve with this organizational reform?

Masaya Hayashida: Yoshinori Isozaki is currently the President & CEO of Kirin Brewery Company. While he was President of Kirin Holdings, he learnt of the concept of ‘creating shared value’ from its joint creator, Professor Michael Porter of the Harvard Business School. He was very impressed by the concept, and that was why we launched the CSV Division. Kirin Group’s CSR goal was defined at that time as ‘pursue the company’s fundamental objectives to create new value for customers and society,’ so we were already using a very similar concept to CSV.

Kawamura: Certainly, you had the foundation upon which to practice ‘true CSR’ through your own businesses.

Hayashida: That’s right. We have two objectives for our non-alcoholic beverage, Kirin Free: to create a new market, and to eradicate drunk driving as a social problem. Similarly, our twin objectives for the ‘low-carb beer’ series are to create a sub-category, and care about health.

The trigger for focusing further on CSV was the reconstruction activities following the Great East Japan Earthquake. When we started, our activities were mostly philanthropic - fundraising and volunteering - but we wanted to contribute more on an ongoing basis, so we evolved our focus. The main objective of our reconstruction activity now is to use our business to help the agriculture and fisheries industries, so that the local community can regain its vitality.

Kawamura: One of your products is ‘Kirin Hyoketsu,’ made with fruits from Fukushima, isn’t it?

**Hayashida:**Yes. We released Hyoketsu Japanese Pear in November 2013. Originally it was intended to be a limited-edition product that used pears from the Fukushima region, but we continued to sell it in 2014 and 2015. In March 2015 we released ‘Hyoketsu Peach’ using peaches from the Fukushima region. This is a regular product.

Fruits from Fukushima were suffering from reputational damage because of residual radioactivity from the power plant. We tested them carefully and found they were entirely safe for human consumption. As a result, not only did we increase our sales, but also Fukushima farmers could point to their products’ safety through their use in our products. We had several cases like this while carrying out our reconstruction activities, so we organized them with the concept of CSV.

It’s pointless to choose between CSR and CSV

Kawamura: So Kirin reorganized the company & its businesses based on the concept of CSV?

Hayashida: It’s more that we continue to review; we are still in that process at the moment. We’ve had some individual achievements but we can’t say we have completed our mission as a whole organization. Paradoxically, if all employees acted with the CSV concept in mind, our CSV management department would no longer be needed.

Another important point is marketing. I became a general manager of the CSV management department about a year and half ago but had previously worked in the marketing department for a long time. From a marketing point of view, the purpose of product development is to meet the needs of both the individual customer and the entire clientele. In other words, it is to solve problems for all customers.

From a higher perspective, it is also ‘to solve social problems,’ and I know this sounds difficult but social issues & customers’ issues are inseparable. We believe the CSV concept can capture that part and make good use of it in product development.

Kawamura: Yes, I also think that the social issue is a summation of problems faced by the company, customers and society.

Hayashida: When the acronym ‘CSV’ was first used in Kirin we had futile hypothetical arguments about whether this was CSR or CSV. Perhaps this has happened in many companies. Furthermore, there was a terrible misconception that ‘we don’t have to do CSR any more.’ The important point here is not to choose between CSR and CSV: after all, the keyword is ‘sustainability.’

Kawamura: Indeed, 2015 was ‘sustainability’s first year’ in Japan as well as in the rest of the world, and any business that ignores sustainability will no longer be acceptable in the future.

Hayashida: For example, people involved with the Fukushima pear used for ‘Hyoketsu’ very easily understand the CSV concept. Other people can understand CSV in theory but have difficulty in associating themselves with CSV in practice. Hence, we try as much as possible not to use the term ‘CSV.’ We first show what we actually did, and then later reveal that it was based on CSV. People can’t have a sense of realism just through learning concepts; they have to see the concept put into practice.

Kawamura: How does Kirin apply CSV in its business?

Hayashida: Kirin’s CSV has six themes. ‘Strengthening bonds between people and society’ and ‘health’ are the two themes positioned as Kirin’s unique initiatives. The others include ‘environment,’ ‘food safety and security,’ ‘human rights,’ ‘labour,’ and ‘fair operating practices.’

In the area of health, we are developing a new mobile application in addition to various products. It is still at its trial stage but we would like to contribute to our customers’ lives in general through the app, which we plan to announce in May.

‘47 Todofuken no Kirin Ichiban’ brings CSV to fruition

Kawamura: When I looked at Kirin’s CSV explanatory material, I thought Kirin integrated CSR and CSV very well.

Hayashida: Yes. As a result of our support of the reconstruction following the Great East Japan Earthquake we recalled that it is important that our products are consumed within the happiness of everyday lives. This will lead to the ‘strengthening bonds between people and society.’

Kawamura: That’s the Kizuna (bond) between people, isn’t it?

During this initiative, while we were adapting our CSV concept, we became more aware of the importance of a community-based approach. National brands usually unify their design and quality across their ranges but we have unique products from individual prefectures, so this is groundbreaking as well as quite challenging within the company. This idea came about because people on the front line were also becoming aware of CSV.

The ‘47 Todofuken project’ is important for Kirin from both CSV and product strategy points of view. Takayuki Fuse, the President and CEO of Kirin Brewery Company, urges our employees to ‘be the most customer-oriented company.’ Both sales and product departments brought forward their own ideas, and ‘47 Todofuken’ was the result.

Kawamura: You also came up with various ideas for the ‘Kirin Kizuna Project.’

Hayashida: Yes. We’ve created an Agricultural Training Center, because we wanted not only to support the farmers in terms of human resource development, but also to support people who hoped to contribute to Tohoku in some way. So we have a session at the Morning University of Marunouch Tokyo, in order for us to match Tohoku farmers to those who want to help. This is just one example of our efforts. Mr. Atsushi Yoshida from Tono Asahi Farm has started growing padron peppers, which are originally from Spain. His peppers have become very popular, so we help him expand his business by carrying out trial sales at our Kirin City. This initiative has grown, and now people are talking about new urban development in Tono town.

Kawamura: In Kirin’s corporate structure, the CSV Division consists of the CSV Management Department and the Corporate Communications Department, as well as the Strategic Branding and Digital Marketing Departments. The aim of this is to link CSV and branding, isn’t it?

Hayashida: Yes, that’s right. Our mission is to promote the Kirin brand as a whole, both within and beyond the company. Continuously creating shared value will enhance our brand reputation.

Kawamura: Kirin Group has 233 subsidiaries in 22 countries. What’s your vision for CSV strategy from the global point of view?

Hayashida: In 2013 we established Kirin Company Limited under the umbrella of the Kirin Group in order to oversee its beverage businesses in Japan. We also have Lion in Australia, Brazil Kirin, and Kirin Holdings Singapore as overseas beverage companies. We will evolve the Kirin Group’s CSV strategy going forward because each country has different characteristics. I think that it is necessary to adapt our actions to each country, while making commitments to them all.

Kawamura: Nowadays every business depends on the Earth's sustainability. With that in mind, it is important for companies to clarify their long-term stance on sustainability, and this will lead to a ‘sustainable brand.’

Hayashida: Environmental activity was an important matter even before the concept of CSV was brought up. Beer brewing is an equipment industry and large quantities of water are used. Beer is made from agricultural products and water; it requires containers and has to be delivered to stores. CO2 & environmental issues are wrapped up in all of its processes, so continuous efforts to ameliorate environmental issues are one of our top priorities.

Kawamura: What do you find difficult when working on CSV?

Hayashida: When I’m asked: ‘What are the goals of CSV?’ or ‘How are they reflected in the financial indicators?’, I find this difficult. It doesn’t mean we have clearly to show it on the financial indicators. Our overall efforts based on the CSV concept will lead to us ‘being a company indispensable to our customers’ and a favored brand. I would like to create a Kirin brand in which our company’s personality is highly regarded.

Kawamura: It is said ‘every person has Jinkaku (dignity) so every company has Shakaku (dignity).’ Every company is challenged to identify its Shakaku brand. As Kotler says in his book, Marketing 3.0 & 4.0, the company itself becomes a brand, and I think there is a new company value to be found in that root, such as ‘integrity.’

Hayashida: I think the goal is simply that day-to-day actions and all business activities play their part in CSV initiatives.

This post first appeared on Sustainable Brands Japan.


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